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Saturday, December 3, 2016

Proof that piles up by the month: Deutsche Bank Pays $60 Million To Settle Gold-Manipulation Lawsuit

2016 is shaping up as the year when countless
conspiracy theories will be confirmed to be non-conspiracy fact: from
central bank rigging of capital markets, to political rigging of
elections, to media rigging of public sentiment, and now, commercial
bank rigging of both silver and gold.

An affidavit filed in October shed more light on the settlement process:

The negotiations with Deutsche Bank over the material terms of the
Settlement took place over several months starting in December 2015 and
continuing until the Deutsche Bank Settlement Agreement was executed on
September 6, 2016.

Following initial phone calls with Deutsche Bank’s counsel in
December 2015, Lowey and Grant & Eisenhofer engaged in lengthy
negotiations with Deutsche Bank’s counsel over the material terms of the
settlement, including the amount of the settlement consideration, the
scope of the cooperation to be provided by the Deutsche Bank Defendants,
the scope of the releases, and the circumstances under which the
parties would have the right to terminate the settlement.

During the course of the negotiations, Class Counsel presented what
we perceived to be the strengths and weaknesses of the claims and
defenses, as well as Deutsche Bank’s litigation exposure.
In February 2016, we reached an agreement with Deutsche Bank on the
amount of the settlement, subject to the negotiation of other material
terms of the deal. For example, given that this is the first settlement
in the case, it was our view that the cooperation provisions of the deal
were extremely important to our ability to maximize the overall
recovery for the class against the Non-Settling Defendants. The
negotiations as to the scope of the cooperation provisions continued for
several months.

On April 13, 2016, counsel for Deutsche Bank and Class Counsel signed
a Binding Settlement Term Sheet (“Term Sheet”). The Term Sheet set
forth the terms on which the parties agreed, subject to the negotiation
of a full Settlement Agreement, to settle Plaintiffs’ claims against
Deutsche Bank. At the time the Term Sheet was executed, Class Counsel
was well-informed about the legal risks, factual uncertainties,
potential damages, and other aspects of the strengths and weaknesses of
the claims and defenses asserted.

By letter dated April 13, 2016, the Parties reported to the Court via
ECF that the Term Sheet had been executed, and advised the Court that
the Term Sheet would be superseded by a formal settlement agreement. ECF
No. 116.

The parties negotiated the Deutsche Bank Settlement Agreement over the course of the next several months.
The negotiations over the terms of the Deutsche Bank Settlement
Agreement included various material terms over which the parties had
substantial disagreement, requiring significant give and take on both
sides. To that end, drafts of the Deutsche Bank Settlement Agreement
went back and forth between the parties, and numerous contested issues
were raised, negotiated and resolved, including without limitation,
continuing negotiations over the scope of Deutsche Bank’s cooperation
(see ¶ 4(A)-(G)), the scope of the releases (see ¶ 12 (A)-(C)), and the
circumstances under which the parties could terminate the Settlement
(see ¶ 21).

Thus, the Deutsche Bank Settlement Agreement, which was executed
(along with the Supplemental Agreement) on September 6, 2016, was the
culmination of arm’s-length settlement negotiations that had extended
over many months.

The Deutsche Bank Settlement was not the product of collusion. Before
any financial numbers were discussed in the settlement negotiations and
before any demand or counter-offer was ever made, we were well informed
about the legal risks, factual uncertainties, potential damages, and
other aspects of the strengths and weaknesses of the claims against
Deutsche Bank.

The Deutsche Bank Settlement involves a structure and terms that are
common in class action settlements in this District. The consideration
that Deutsche Bank has agreed to pay is within the range of that which
may be found to be fair, reasonable, and adequate at final approval.

There was just one thing missing: the settlement amount. Then, on
October 17, the first part of the answer was revealed when according to
court filings,Deutsche Bank had agreed to pay $38 million to settle the silver manipulation litigation.
The settlement, which was disclosed in papers filed in Manhattan
federal court, concludes one of many recent lawsuits in which investors
have accused banks of conspiring to rig the precious metal markets.
However, until Deutsche Bank's payment of $38 million to settle silver
manipulation allegations, there was never any formal closure.
* * *
Then, last night, two months after the silver settlement, Deutsche
Bank agreed to pay another $60 million to settle the other side of the
antitrust litigation: that of rigging gold.
As Reuters first
reported, the preliminary settlement was filed on Friday with the U.S.
District Court in Manhattan, and requires a judge's approval. As part of
the settelement, Deutsche Bank has denied any wrongdoing, and with the
two settlements, and some $98 million out of pocket, it is clear of any
future liability regarding precious metals manipulation.
The case is one of many in the Manhattan court in which investors
accused banks of conspiring to rig rates and prices in financial and
commodities markets.
As we reported previously, in an Oct. 3 decision, U.S. District Judge
Valerie Caproni in Manhattan said investors could pursue much of their
lawsuit against the other four banks named in the anti-trust lawsuit
which include Barclays, Bank of Nova Scotia, HSBC and Societe Generale.
In October, Vincent Briganti, a lawyer for the investors, said the
silver settlement deal provides "substantial monetary compensation plus
cooperation from Deutsche Bank in the continued prosecution of this
important case against the non-settling defendants." He has yet to
comment on the gold settlement. Alas, as a result of the settlement, yet
another discovery process has been scuttled, preventing the public from
having a glimpse into what really went on in precious metal "markets."
* * *
So who gets to benefit from the settlement? This is what the lawyer said on the silver settlement disclosed in early October:

We have reason to believe that there are at least hundreds of
geographically dispersed persons and entities that fall within the
Settlement Class definition. The Settlement Class includes traders of
COMEX Silver Futures contracts, anyone who traded in physical silver
based on the Silver Fix, and traders in various silver derivatives.

The same will likely be applicable to gold traders following Friday's monetary settlement.
The other beneficiary, of course, is the class of investors, people
and "conspiracy theorists" who claimed all along that gold and silver
were subject to rigging in various forms throughout the years. Well, you
were right. However, we wouldn't hold much hope for getting any
substantial monetary rewards. By the time the settlement is done, there
will likely be at best a few hundred dollars left per claimant.
The good news is that this formal closure will open the door for
other, similar lawsuits - for both silver and gold manipulation - now
that the seal has been broken.